The second week of October saw a minor improvement in investor sentiment toward Indian startups following a slow start to the month. From October 7 to October 12, Indian companies raised $114 million in 22 agreements, a 32% increase over the previous week when only $86.4 million was raised in 16 deals. Even with this recovery, a significant tendency that reflects a more cautious investment climate following the third quarter’s boom is the absence of big fundraising rounds. Let’s examine the highlights of the funding activity, industry preferences, and noteworthy changes in more detail.
Funding Trends: A Week of Modest Growth
While funding activity in Indian startups showed some signs of recovery, the week still did not see any mega funding rounds. For the second consecutive week, no deals crossed the $50 million mark, a stark contrast to the highly active third quarter of 2024. In Q3 2024, Indian startup funding doubled year-on-year to $3.4 billion from $1.7 billion in the same period in 2023, buoyed by a 115% surge in late-stage investments. This surge saw late-stage startups raise over $2.1 billion in the September quarter, up from $984 million in Q3 2023. The contrast in October signals a short-term pause, with investors likely focusing on smaller, more strategic investments.
Deeptech Takes Center Stage with Biggest Deal of the Week
One of the major highlights of the week was the $38 million Series C funding secured by AI-based robotics startup Haber, which issued Series C CCPS (Compulsorily Convertible Preference Shares) to VC firms including Accel India, Beenext Capital, and Creaegis. This funding round not only topped the charts but also highlighted the growing interest in deeptech, which emerged as the investor favorite sector of the week.
Deeptech startups raised a total of $45.4 million across three deals this week, pushing enterprise tech out of the spotlight, which had been the dominant sector in previous weeks. However, despite being dethroned, enterprise tech startups still secured $7.2 million across four deals, maintaining the highest number of deals closed this week. Cleantech also made a strong showing with three deals, signaling continued investor interest in sustainability-focused startups.
Most Active Investors: Beenext and Lumikai Lead the Charge
Among the investors, Beenext and Lumikai emerged as the most active this week, each backing two startups. Beenext invested in Haber and mobility-focused Nayan Tech, while Lumikai placed its bets on AI-driven Framer AI and gaming platform Deftouch. These investments reflect a growing trend toward supporting AI and deeptech innovations, as investors look for cutting-edge technologies with long-term growth potential.
New Fund Launches Aim to Boost Startup Ecosystem
In addition to direct startup funding, the week saw the announcement of new investment funds, aiming to inject fresh capital into the Indian startup ecosystem. LC Nueva Investment Partners, a joint venture between Lighthouse Canton and Nueva Capital, launched a fund with a target corpus of INR 150 crore ($18 million), with an additional INR 100 crore ($12 million) greenshoe option.
Meanwhile, NBFC Northern Arc launched its Finserv Fund, a category-II alternative investment fund (AIF), with a significantly larger target corpus of INR 1,500 crore (around $178.5 million). This fund is expected to further fuel growth, particularly for fintech and financial services startups.
IPO Updates: BlackBuck and Zetwerk in the Spotlight
Things are getting hotter in the Indian startup IPO scene. After releasing its draft red herring prospectus three months ago, BlackBuck, a logistics firm, obtained approval this week from market regulator SEBI for its INR 550 crore ($66 million) initial public offering. Aiming for an IPO in the next two years, unicorn B2B marketplace Zetwerk has also started preliminary talks with investment bank JP Morgan.
In addition, PhysicsWallah has appointed Axis Capital, Kotak Mahindra Capital, Goldman Sachs, and JP Morgan as its IPO managers, following a $210 million funding round. This indicates the company’s intention to take advantage of the present edtech industry momentum.
